Lately there has been much written about Making Home Affordable, President Obama’s comprehensive plan to help stabilize the housing market. Some of it is good; some of it is not so good. His plan, first introduced in February, is designed to help responsible homeowners who are at risk modify their mortgages in order to lower their monthly payments and avoid foreclosure.

This plan has the potential to help out more than 7 million responsible homeowners avoid foreclosure by either restructuring or refinancing their mortgages. Currently, there are more than 200,000 trial loan modifications underway, tens of thousands of refinancings have closed and informational mailings about the program have been sent to more than one million borrowers who may be eligible.

Recently, the U.S. Department of Housing and Urban Development (HUD) announced that the Federal Housing Administration (FHA) has implemented changes to its loan modification program. By August 15, FHA borrowers will be able to reduce their monthly mortgage payments by seeking a loan modification through their current mortgage company or loan servicer under the new FHA-Home Affordable Modification Program (FHA-HAMP).

FHA borrowers will now be able to modify their mortgages just like some many already using the Making Home Affordable program to help prevent foreclosure.

How does Making Home Affordable work? There are many incentives that it provides to both lenders and borrowers. Here are just a few:

• The Treasury helps lenders and servicers reduce a homeowner’s monthly mortgage by having lenders reduce mortgage payments to 38 percent of a homeowner’s monthly income.
• The Treasury then matches the lender’s additional reductions dollar for dollar until the mortgage payment reaches 31 percent of the borrower’s monthly income.
• Homeowners are encouraged to stay current on their monthly mortgages and can receive a “Pay-for Performance Success Payment” which gives them $1,000 each year for up to five years as long as they are current on their monthly payments. This money goes towards reducing their principal.

NTHC and other HUD certified counseling organizations stand ready to do their part to help qualified homeowners prepare to talk to their lender and to take full advantage of the bold plan announced by the Obama administration. The NTHC offers FREE foreclosure help and is just a phone call away at 214-946-3500. For more information, please check out our website at www.nthcinc.org or www.makinghomeaffordable.gov.

Albert Martin, Executive Director, North Texas Housing Coalition